How robo-advice is revolutionising wealth management

The UK Robo-Advice and Digital Wealth Summit returns to London for a second year on Thursday 20th September. Here, we take a look at the fintech pioneers leading the way in this fascinating sector.

Robo-advice and digital wealth management are one of the fastest-growing and most talked-about areas of the financial services’ digital transformation. The concept was originally conceived as a way of extending financial advice to the mass market, but today the technology has, and will only continue to be, extended to insurance, pensions and many other areas of finance, benefiting both consumers and businesses.

As we welcome the second year of the UK Robo-Advice and Digital Wealth Summit, we take a look at some of the keynote speakers and how their respective businesses are pioneering the digitalisation of wealth management and making it easier for consumers and businesses alike to make the most of their money without the hassle.

PensionBee is “the first and only technology operating in the UK that can identify, transfer and combine pensions for users”.

Essentially, it’s an online pension manager helping those who often move jobs to amalgamate and track their pensions in a single online platform. To use it, users need simply list their employment history and the platform combines their pensions into a single plan.

According to PensionBee, the average person has 11-12 jobs in their lifetime and people are understandably losing track of existing pension pots largely due to a lack of support from government in the transfer process (a total of over £500m in forgotten pensions, to be precise).

Smart Pension enables savers to track how much they have invested into their retirement pots and plan for their retirements accordingly. By empowering users with a greater awareness of their assets, across multiple pension pots, the company is bringing much-needed transparency to a previously outdated process.

Earlier this month the company announced former Virgin Group chief executive Stephen Murphy to as the new chairman of its board.

Smart Pension launched an app for iOS and Android earlier this year, allowing users to track their pension balance in real-time, and even increase their contribution levels to certain funds when they can afford to do so. It’s also empowering its users even further through the launch of its Amazon Alexa Skill, allowing savers to stay up-to-date with their savings using simple voice commands.

AtomInvest’s mission is to democratise access to alternative investment funds across private equity, venture capital and hedge funds – to ultimately make alternative investments easily accessible to the wider market.

“Alternative investments are great manufacturers of returns in up markets and down markets…however the privilege of investing into these funds was reserved for big institutions such as pension funds, endowments and insurance companies”, founder and CEO Hemal Mehta tells HedgeWeek.

Hemal has subsequently launched a digital platform for high net worth investors and smaller institutions to back alternative investments. It must be noted that minimum investments start from $100,000.

AtomInvest claims to be the lowest cost provider in the market due to charging investors a flat fee for the service and infrastructure of 1% of the money they are putting in.

When it comes to automated investment, WealthSimple is one of the biggest names in the game. CEO of WealthSimple Michael Katchen says it’s designed to “simplify investing so you can get on with your life”.

Its technology helps investors earn the best possible returns on their money through automatic rebalancing, dividend reinvesting and other methods.

What is particularly attractive about WealthSimple is its management fees, fixed at just 0.5% on accounts up to $100,000, and only 0.4% on accounts over $100,000. Traditional mutual funds have been known to charge as much as double this, leaving us to question why anyone wouldn’t be interested in setting an investment amount and leaving it to look after itself.

Wealth Wizards is a robo-adviser majority owned by LV. In March this year it launched an AI service, Truro, which will learn and replicate the advice advisers give their clients after examining the business’ previous work.

Speaking to Financial Reporter, CEO Andrew Frith has reiterated that “robo-advice isn’t here to put financial advisers out of a job…instead it’s a tool which is complementary to financial advisers’ services”, and this is exactly what their new AI tool is doing.

Andrew has built Wealth Wizards on the premise that robo-advice is, generally, more robust and consistent than human judgement alone, while at the same time helping to bridge the gap when it comes to financial advice for the amateur or intermediate investor.

Moneyfarm promises to create an investment portfolio, adjust it automatically and provide advice to users of the platform for a fraction of the cost of traditional investment platforms.

It only launched in the UK a couple of years ago, but has already made a name for itself as one of the go-to options for first-time investors looking for support as they enter the stocks & shares market with little or no experience, without needing to worry about the fees of traditional investment platforms.

The platform has announced it has over £400 million in assets under management. In May it raised £40m to fund product development, and earlier this year reported a revenue of £1million for the first time.